Capital Gains Tax
Rate of tax and annual exemption
The rate of CGT remains 18% for those whose total taxable income and gains for the year are below £32,010, and 28% for gains which are above that figure. The annual exempt amount for CGT increases by £300 to £10,900. This is the normal increase in line with the consumer prices index.
Trustees continue to be liable to CGT at 28% after deducting half the normal annual exemption (£5,450). The annual exemption is shared between trusts set up by the same settlor since June 1978, subject to a minimum of £1,090.
Entrepreneurs' Relief (ER)
The lower 10% rate of CGT is to be extended to many shares acquired under the Enterprise Management Incentive schemes which small businesses may use to reward key employees. Entrepreneurs’ Relief normally requires the shareholder to own the shares for at least 12 months; the length of time for which an EMI option is held may now be included in this qualifying period. It will also not be necessary for an EMI shareholder to own 5% of the company.